K1s

[Tracy Lee]

TP gets a 1099 R  showing: Charles Schwab & Co Inc Cust SEP-IRA with gross & taxable distribution, code 7 and IRA box marked.

He also gets a K1 in his name that shows Charles Schwab & Co Inc Cust SEP-IRA with Box 1,2,5,6a  income, do I also add that K1 to tax return or is it all taxed thru that 1099R?

I always find these confusing.

[schirallicpa]

Does it show the same account number.  

 

[Abby Normal]

A K1 inside a retirement account is not entered. And you have to be careful with K1 investments inside retirement accounts because they can result in taxable income, although it's rare.

[b#tax]

Generally when I see these with the same account number the 1099R will be reported on the tax return and the K-1 is there to report the unrelated business taxable income which would not be reported on the return but reported on a 990-T. If memory service me correctly, they can have up 1000.00 of UBTI before you have to report. Many brokerages often handle the reporting and paying the UBTI for the client by filing the 990-T so you may need to check with the client. 

[Tracy Lee]

Account number is different; so sounds like I need to enter the K1?

Thank you for reminding me about the account number because it doesn't show up on the K1 itself, just on the supplemental page.

[jklcpa]

1 hour ago, Tracy Lee said:

He also gets a K1 in his name that shows Charles Schwab & Co Inc Cust SEP-IRA

What type of entity is shown on the K-1 as the owner of the account?  Should be box "I" (Cap letter i) partway down the left side. Does it say "individual" or "retirement" or "IRA", or just what is in that box?

[Tracy Lee]

Both his K-1's (1065) show Box I1 Type of Entity as IRA/SEP/Keogh.  He had no separate Charles Schwab Form 1099 Year End Summary, just the 1099R, and the account numbers did not match to his K1's.  I did NOT enter his K1's.

Her K-1's (1065) show Box i1 Type of Entity as Individual.  She had a separate Charles Schwab Form 1099 Year End Summary with statement page showing her K1s as NOT being reported to IRS with matching numbers tying them all together, so I entered her K1s.

So, did I do this right, or should I enter his K1's as well?

[jklcpa]

I think your handling is correct.  His K-1 activity is inside his IRA. Nothing to report on the 1040 except the 1099R.

Her partnership investment is in a taxable investment but not on the broker's consolidated 1099, so you would enter the K-1 activity on the 1040.

[Lion EA]

Is the tax ID # his SSN? Or, an EIN XX-XXXXXXX ? If it's an EIN (not your client's SSN) then have client check if Charles Schwab is filing any required Form 990-T.

I think B#TAX is right about the $1,000 threshold, but that includes UBTI from ALL income sources within that IRA.

[Slippery Pencil]

It's not his K1, it's his IRA's K1.  Check the ID# as Lion suggested.  It will be the IRA's EIN, not his SSN.